Chapter

IV. Main Developments in Regional Arrangements

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1984
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Several measures to foster regional cooperation were taken in 1983. The European Community (EC)9 entered into two new cooperation agreements, continued negotiations on the accession of Portugal and Spain to the EC, and embarked on negotiations for a third Lomé Convention with the African, Caribbean, and Pacific States. The Central African states signed a treaty to initiate a new economic community, and three other regional arrangements in Africa were expanded. On the Asian subcontinent, the first steps were taken toward forming a common market, and in east Asia the liberalization of interregional trade flows continued. The six states of the Gulf Cooperation Council implemented steps to strengthen their trade links. The Caribbean Community enlarged its membership, and the East Caribbean states reinforced their financial ties by forming a regional central bank.

Negotiations continued on the accession of Portugal and Spain to the EC. After some 40 negotiating sessions with each candidate country, this process was almost completed in several areas: transport, regional policy, economic, and financial questions, capital movements, taxation, harmonization of laws, and the right of establishment for private citizens. Negotiations with Portugal were substantially completed on a customs union for industrial goods, the European Coal and Steel Community (ECSC), participation in the European Atomic Energy Community (Euratom), and external trade. In the eleventh through fifteenth ministerial meetings held in the course of 1983 to negotiate Portugal’s accession, substantial progress was made in the main outstanding areas: agriculture, fisheries, and social affairs. The fifteenth ministerial meeting on April 26 concluded negotiations between Spain and the EC on textiles and on quantitative restrictions concerning EC imports to Spain. At the eighteenth ministerial meeting on December 19, agreement was reached on Spain’s participation in Euratom.

A new cooperation agreement between the EC and Yugoslavia entered into force on April 1. The agreement is for an unlimited period, and covers trade, financial aid, and cooperation in industry, science and technology, energy, agriculture, transport, environment, and tourism. The protocol on financial cooperation between the EC and Tunisia entered into force on June 1; the EC will provide aid to Tunisia in the period to October 31, 1986. The second financial protocols between the EC and Cyprus and Israel were signed in December and October, respectively. The protocols provide for Community aid through December 31, 1988 for Cyprus, and through October 31, 1986 for Israel. In July, the EC and Cyprus signed a protocol on trade arrangements, and in November the existing special trade arrangements applied by the EC to Malta were extended until June 30, 1984, pending the completion of ongoing negotiations.

The Council of Ministers of the African, Caribbean, and Pacific States (ACP)10 and the EC held their eighth meeting in Brussels in May to discuss the operations of the second Lomé Convention. Discussions continued on Stabex (the EC’s export shortfall compensatory financing scheme)—in particular, on the shortfall in resources for 1980 and 1981, and on the new products that could be added during the life of Lomé II. Talks were also held on the sugar protocol, on agricultural and cultural cooperation, and on the arrangements for importation of certain ACP products by the EC. Negotiations for the conclusion of a successor convention to Lomé II, which expires on February 28, 1985, commenced on October 6 and 7 in Luxembourg. Angola and Mozambique, having declared that they are ready to accede to Lomé III, are participants in the negotiations.

A framework agreement for economic cooperation between the EC and the Andean Pact countries11 was signed in Colombia on December 17. This nonpreferential agreement, aimed at tightening commercial and economic links between enterprises in the two regions, will run for five years. In addition, the two parties will grant each other most-favored-nation status under the GATT. The fourth ministerial meeting between the EC and the Association of South East Asian Nations (ASEAN)12 was held in Bangkok in March to discuss progress made in projects undertaken under the aegis of the EC-ASEAN cooperation agreement signed in 1980. Discussions continued at the ambassadorial level in October in Brussels, where the two delegations expressed their hope that the Common Fund, a key element of the Integrated Program, would become operational soon.

The annual (or, in some instances, biannual) meetings of the joint committees responsible for the management of the free-trade agreements between the EEC and EFT A countries13 were held in April, May, June, and December. The final tariff cuts scheduled in the free trade arrangements signed by the EC and EFTA countries in 1972 came into effect at the end of 1983, with the result that trade in all types of industrial goods (and in some processed agricultural foodstuffs) became free of import duties from January 1, 1984.

The EC-China joint committee met in Beijing on November 8 and 9. The two parties agreed that most of the operations already under way should be pursued and that their trade agreement should be extended by a year, in accordance with the relevant provisions. On May 30–31, the EC-India Joint Commission agreed to continue efforts to reduce India’s trade deficit with the Community and adopted a program to promote India’s trade. The third meeting of the EC-Romania joint committee was held on December 2–3; the parties agreed to take steps to carry out the objectives of their 1980 trade agreement.

The Economic Community of West African States (Ecowas)14 held its sixth annual summit conference on May 28–30 at Conakry, Guinea. The summit adopted a resolution accepting the implementation of a single trade liberalization scheme for industrial products originating from member states of the Community. In doing so, it asked the member states of the West African Economic Community (WAEC)15 and those of the Mano River Union16 to merge their aims with those of ECOWAS to facilitate a single customs union, which the Lagos Plan of Action envisages to be in place by the year 2000. A resolution relating to the creation of a single monetary zone was also adopted; it provided a mandate for the necessary studies for the creation of such a zone, as well as for any improvements in monetary and payments arrangements which would further promote subregional trade.

The fifth meeting of the heads of state of the West African Monetary Union (WAMU)17 was held in Niamey, Niger, on October 30–31, and took the decision to admit Mali into the WAMU. Issues of common interest were also discussed, and it was noted that work had progressed on the economic and financial integration of member countries. The heads of state of the WAEC met on the same occasion to discuss the needs of the populations of member countries, in particular for water resources and transport systems.

On October 19, a treaty was signed in Libreville, Gabon, setting up the Economic Community of the States of Central Africa (ECSCA).18 The economic grouping is intended to be a Central African equivalent of Ecowas. It plans the progressive harmonization of the member economies, with a view to eventually forming a common market and monetary union. At the June meeting of the heads of state of the Gambia River Development Organization (OMVG),19 Guinea-Bissau was admitted as a member, and the final communiqué called for the rapid integration of Guinea-Bissau’s programs with those of the OMVG. During the year, Rwanda joined the Preferential Trade Area of Eastern and Southern African States (PTA).20

The nine-nation Niger Basin Authority (NBA)21 met in Conakry in late May. The summit prepared guidelines for achieving the aims of the organization, and instructed the executive secretariat to strengthen cooperation with other regional and sub-regional bodies for better coordination of their programs of action. At a September meeting of the leaders of the Mano River Union, Guinea called for the establishment of a common currency for member states.

The heads of state of the Central African Customs and Economic Union (UDEAC)22 met on December 19–20 in Bangui, Central African Republic, to discuss issues of mutual importance. The summit readmitted Chad, and agreed to the formal accession of Equatorial Guinea to the Union. It also urged the Bank of Central African States (BEAC)23 to accelerate its deliberations on the admission of Equatorial Guinea to BEAC. At an earlier BEAC meeting in Paris in December, the decision to admit Equatorial Guinea had been postponed to a later date.

At the annual meeting of the African Development Bank (AfDB)24 in Nairobi, Kenya, during May 11–14, India, Portugal, and Saudi Arabia were admitted as nonregional members, subject to the completion of all the necessary formalities. The meeting also agreed to an accord of cooperation with Brazil. During the term of 1983, Austria, Belgium, and the United Kingdom completed the ratification procedures for membership of the AfDB, thereby bringing the total number of nonregional stockholders to 18.

The Closer Economic Relations (CER) trade agreement between Australia and New Zealand, which supersedes the 1966 New Zealand-Australia Free Trade Agreement (NAFTA), came into force on January 1, 1983. Except for a limited number of items, the new agreement provides for the phased elimination of all tariffs between the two countries within a 1–5 year period, depending on initial tariff levels, and of all quantitative import restrictions and tariff quotas on Trans-Tasman trade by 1995. In respect of the latter, intercountry access limits for each grouping of products will be increased by 15 percent a year in real terms until the access limit reaches $NZ 1 million, and thereafter at an annual rate of 10 percent in real terms. The agreement also contains provisions pertaining, inter alia, to export incentives, agricultural support and stabilization measures, and government purchases. Under the agreement, both countries retain the freedom to conduct their own trade policies with third countries.

ASEAN member countries continued to expand the scope of their Preferential Trading Arrangement during 1983. At the end of the year, nearly 19,000 items were subject to preferential tariff cuts of between 20 and 25 percent under the agreement, compared with some 6,600 such items at the end of 1981. In addition, at the annual meeting of ASEAN economic ministers in Bangkok in October, it was decided to increase the margin of preferences for food and nonfood items already subject to the arrangement in stages, to a maximum of 50 percent by March 19, 1984. The margin of preferences for ASEAN industrial-project products was set at 50 percent. The ministers also reached agreement on ASEAN Industrial Joint Ventures (AIJV); the agreement was signed in Jakarta, Indonesia, on November 7, 1983. Under the agreement, an AIJV should involve private sector cooperation between at least two ASEAN countries and have, in most circumstances, a minimum ASEAN ownership of 51 percent. Nations participating in the AIJV are required to extend to AIJV products a minimum 50 percent margin of tariff preference, which is to last for four years, during which any other ASEAN member may join the AIJV. After the four-year waiver period, any entity in any ASEAN country which produces the AIJV item will receive the same margin of tariff preference for that item as granted by the participating AIJV countries; this last provision is nonreciprocal. At its meeting in Jakarta on August 15, the ASEAN Permanent Committee approved the application of Brunei to join ASEAN in 1984, thereby becoming its sixth member.

In New Delhi, the foreign ministers of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka signed a pact in August to launch a program of regional cooperation to accelerate economic growth and social progress. The program includes provisions for cooperation agriculture, rural development, transport, and postal services. It has a common market among its member nations as its eventual aim.

At the Twenty-Third Conference of the South Pacific Commission (SPC)25 in October in Saipan, Northern Mariana Islands, 11 new members were admitted to the Commission: American Samoa, the Federated States of Micronesia, French Polynesia, Guam, the Republic of the Marshalls, New Caledonia, the Northern Mariana Islands, the Republic of Belau, the Pitcairn Islands, Tokelau, and Wallis and Futuna. The Conference also reviewed the Commission’s work program for technical assistance to member states, particularly with respect to food and materials and the development of marine resources. Discussion of merging the SPC and the South Pacific Forum26 into a single regional organization was postponed, pending further study. On this latter matter, the South Pacific Forum had arrived at the same conclusion at its fourteenth meeting of the heads of government held in Canberra, Australia, from August 29–30.

The first phase of the unified economic agreement, approved by the heads of state of the members of the Gulf Cooperation Council (GCC)27 in November 1981, went into effect on March 1, 1983. Intramember customs duties were abolished on agricultural, manufactured, and animal products, provided that the goods satisfied a minimum local value-added content criterion. In addition, articles in transit between member states became exempt from taxes, ships from member states obtained free access to each other’s port, and certain groups of GCC professionals and workers became eligible to practice in any of the member states. The May meeting of the GCC finance ministers approved the imposition of a uniform customs levy of 4—20 percent on non-GCC imports from September 1. Four of the member states have acted under the decision.

On April 17–19 the annual meeting of the Arab Monetary Fund (AMF)28 took the decision to double the AMF’s capital. The increase is to be subscribed by AMF member countries in five annual installments. At a concurrent meeting of the Arab Bank of Economic Development in Africa (BADEA)29 a new five-year program of support for non-Arab Africa was approved. BADEA doubled its project-share ceiling to 80 percent for projects valued at less than US$5 million; individual project commitments may rise to US$15 million in exceptional cases.

At the fifth Extraordinary Conference on Evaluation and Convergence in Montevideo, Uruguay, which ended on May 30, the non-Andean members30 of the Latin American Integration Association; (LAIA)31 concluded their renegotiations of trade and tariff preferences originally agreed to under the Latin American Free Trade Association (LAFTA). Brazil and Mexico decided to separate themselves from the multilateral arrangements subscribed to by the non-Andean LAIA members and to seek bilateral links between both themselves and the other non-Andean LAIA countries. On May 12, the LAIA members agreed to maintain, with effect from May 1, the pre-existing system of trade preferences negotiated under LAFTA.

The heads of state of the Andean Pact met in Caracas, Venezuela, on July 25, to discuss the economic and financial problems of concern to member states. They undertook to avoid new restrictions on interregional trade and to eliminate existing restrictions with a view to accelerating the formation of an integrated regional market. They also undertook to study the creation of the “peso ordino,” to which member currencies would be linked and which would serve as a stabilizing factor for regional trade and financial flows. Prior to the Caracas meeting, two members of the Pact had announced the lifting of protectionist measures that had threatened to curtail trade within the region. At the December 17 summit of the Andean Pact heads of state in Colombia, it was announced that discussions relating to Panama’s accession to the Pact would be started.

The heads of government of the Caribbean Community and Common Market (Caricom)32 met in Port of Spain, Trinidad and Tobago, on July 4—8. The summit admitted the Bahamas as the thirteenth member of the Community. The participants further agreed to revive the Caribbean Multilateral Clearing Facility, to adopt a regional energy action plan, and to request the Caribbean Development Bank (CDB)33 to undertake a study to identify, evaluate, and recommend measures which would maximize the production, employment, and foreign exchange earnings of the Caricom member countries. A decision on the accession of the Dominican Republic to Caricom was deferred, pending further discussions. At the same meeting, the heads of state of the Organization of Eastern Caribbean States (OECS)34 signed an agreement for the conversion of the East Caribbean Currency Authority into the East Caribbean Central Bank (ECCB). The ECCB is based in St. Kitts, and came into full operation on October 1.

On July 28, the U.S. Congress passed the Caribbean Basin Economic Recovery Act. Passage of the bill allows for the implementation on the part of the United States of the Caribbean Basin Initiative (CBI), which provides for duty-free access, on a unilateral basis, for virtually all goods from the Caribbean area. Previously, in 1982, the U.S. Congress had appropriated a fund of US$350 million under the CBI for emergency balance of payments assistance to Caribbean nations. Final disbursements from the fund were effected in 1983.

Belgium, Denmark, France, the Federal Republic of Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, and the United Kingdom.

The 63 ACP states associated with the EC are divided into the following categories by Lomé II: (1) the least developed countries—Benin, Botswana, Burundi, Cape Verde, Central African Republic, Chad, Comoros, Djibouti, Dominica, Ethiopia, The Gambia, Grenada, Guinea, Guinea-Bissau, Kiribati, Lesotho, Malawi, Mali, Mauritania, Niger, Rwanda, St. Lucia, St. Vincent and Grenadines, São Tomé and Principe, Seychelles, Sierra Leone, Solomon Islands, Somalia, Sudan, Swaziland, Tanzania, Togo, Tonga, Tuvalu, Uganda, Upper Volta, Vanuatu, and Western Samoa; (2) the island and landlocked countries—Antigua and Barbuda, Bahamas, Barbados, Equatorial Guinea, Fiji, Jamaica, Madagascar, Mauritius, Papua New Guinea, St. Vincent and Grenadines, Trinidad and Tobago, Vanuatu, Zaïre, Zambia, and Zimbabwe; (3) others—Belize, Cameroon, Congo, Gabon, Ghana, Guyana, Ivory Coast, Kenya, Liberia, Nigeria, Senegal, and Suriname.

The members of the Andean Pact are Bolivia, Colombia, Ecuador, Peru, and Venezuela.

Indonesia, Malaysia, the Philippines, Singapore, and Thailand.

Austria, Iceland, Norway, Portugal, Sweden, and Switzerland; Finland is an associate member.

The members of Ecowas are Benin, Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo, and Upper Volta.

The members are Ivory Coast, Mali, Mauritania, Niger, Senegal, and Upper Volta.

Guinea, Liberia, and Sierra Leone.

Benin, Ivory Coast, Niger, Senegal, Togo, and Upper Volta.

Angola, Burundi, Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, Gabon, Rwanda, São Tomé and Principe, and Zaïre. Angola did not sign the treaty.

Senegal, The Gambia, and Guinea-Bissau.

Angola, Botswana, Comoros, Djibouti, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Rwanda, Seychelles, Somalia, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.

Benin, Cameroon, Chad, Guinea, Ivory Coast, Mali, Niger, Nigeria, and Upper Volta.

Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon.

Cameroon, Central African Republic, Chad, Congo, and Gabon.

Regional member countries: Algeria, Angola, Benin, Botswana, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Djibouti, Egypt, Equatorial Guinea, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Kenya, Lesotho, Liberia, Libyan Arab Jamahiriya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Niger, Nigeria, Rwanda, São Tomé and Principe, Senegal, Seychelles, Sierra Leone, Somalia, Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda, Upper Volta, Zaïre, Zambia, Zimbabwe.

Nonregional member countries: Austria, Belgium, Canada, Denmark, Federal Republic of Germany, Finland, France, Italy, Japan, Kuwait, Korea, Netherlands, Norway, Sweden, Switzerland, United Kingdom, United States, and Yugoslavia.

Members are American Samoa, Australia, Cook Islands, Federated States of Micronesia, Fiji, France, French Polynesia, Guam, Kiribati, Marshall Islands, Nauru, New Caledonia, New Zealand, Niue, Northern Mariana Islands, Republic of Belau, Papua New Guinea, Pitcairn Islands, Solomon Islands, Tokelau, Tonga, Tuvalu, United Kingdom, United States, Vanuatu, Wallis and Futuna, and Western Samoa.

Australia, Cook Islands, Fiji, Kiribati, Nauru, New Zealand, Niue, Papua New Guinea, Solomon Islands, Tonga, Tuvalu, Vanuatu, and Western Samoa. The Federated States of Micronesia have observer status.

Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libyan Arab Jamahiriya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syrian Arab Republic, Tunisia, United Arab Emirates, Yemen Arab Republic, and People’s Democratic Republic of Yemen. The membership of Egypt has been suspended since 1979.

Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libyan Arab Jamahiriya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syrian Arab Republic, Tunisia, United Arab Emirates.

Argentina, Brazil, Chile, Mexico, Paraguay, and Uruguay.

Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela. There are three observer countries: El Salvador, Honduras, and Spain.

Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts-Nevis, St. Lucia, St. Vincent and Grenadines, and Trinidad and Tobago.

Its members are the Caricom states, Anguilla, British Virgin Islands, Canada, Colombia, Cayman Islands, Turks and Caicos Islands, United Kingdom, and Venezuela. Anguilla, British Virgin Islands, Cayman Islands, Montserrat, and Turks and Caicos Islands are together equivalent to one member.

Antigua and Barbuda, Dominica, Grenada, St. Kitts-Nevis, St. Lucia, and St. Vincent and Grenadines.

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